2026-VIL-184-AAR
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SGST Advance Ruling Authority

GST - Maharashtra AAR - Section 2(68) of CGST Act, 2017 - Classification of body building activity on chassis supplied by the principal, Job Work or Composite supply - Applicant carried out fabrication of load bodies, tippers and special purpose bodies using its own materials, mounted them on chassis owned and supplied by customers and charged a lump-sum consideration - Whether body building activity on the chassis owned and provided by the principal qualifies as job work and supply of services falling under SAC 998881 - HELD - The activity can be called 'job work' only in cases where the activity is confined to treatment or processing of goods belonging to another person - In the present case, the Applicant contributes substantial goods of its own and brings into existence a new and distinct commodity, namely a motor vehicle body, and therefore the activity clearly transcends the scope of job work and falls within the ambit of supply of goods. The statutory fiction of job work under Section 2(68) of the CGST Act, 2017 is not attracted where the activity results in the emergence of a new commodity distinct from the goods supplied by the principal - The Applicant procured steel, sheets, fittings, paint and other materials on its own account, undertook design, fabrication, assembly, mounting and finishing, and brought into existence a new and distinct commodity, with the chassis merely serving as a base. The purchase orders specified supply of body assemblies in units at a fixed price per finished unit, with inspection, rejection and replacement risk borne by the supplier, and contained no job work clause. Clause 3 of Schedule II applies only to pure processing activity that does not result in a new and distinct commodity - The activity is not job work and is not a supply of services under SAC 998881 - The Applicant's activity constitutes a composite supply comprising the supply motor vehicle body independently classifiable as goods under HSN 8707 and mounting of the same on chassis and incidental finishing activities. Therefore, in terms of Section 8(a) of the CGST Act, 2017, the entire composite supply is required to be treated as a supply of motor vehicle body which is principal supply and determine tax liability based on the principal supply. Consequently, as the principal supply is the motor vehicle body, the entire transaction is taxable as a supply of goods under HSN 8707 at the rate of 28% GST – Ordered accordingly - Applicability of CBIC Circular dated 09.08.2018 and Notification No. 26/2019-Central Tax (Rate) to body building on customer-owned chassis - Whether the Circular and the Notification convert the Applicant's activity into a supply of services taxable under Serial No. 26 of Notification No. 11/2017-Central Tax (Rate) - HELD - The Notification operates in the field of classification of services and presupposes that the activity is otherwise a supply of service, and it cannot expand the statutory definition of job work under Section 2(68) or dilute Section 8 relating to composite supply. Its applicability depends on the substance of the transaction, including the extent of goods supplied by the body builder, the emergence of a new commercially distinct product, the dominant intention of the parties and the character of the supply. The Circular concerns transactions where the object of the contract is fabrication of a bus body, whereas here the object of the contract is the supply of vehicle bodies - Reliance on the Circular and the Notification is misplaced and they do not apply to the facts of the case - Composite supply of vehicle bodies with mounting on customer-supplied chassis, classification under Heading 8707 and applicable rate - Applicant supplied vehicle bodies fabricated with its own materials, mounted on the chassis and finished, for a consolidated lump-sum consideration - Whether the supply is a composite supply - HELD - The fabrication, assembly and finishing activities cannot be rendered independently of the goods, and the goods cannot be supplied without such processes, so that the supplies are naturally bundled in a single continuous activity culminating in delivery of a finished body mounted on the chassis, constituting a composite supply under Section 2(30). The predominant element under Section 2(90) is the vehicle body, while fabrication, fitment and documentation are ancillary and incidental. Under Section 8(a), tax liability is determined as that of the principal supply, which is classifiable under Heading 8707 as bodies for motor vehicles of headings 8701 to 8705 - The supply is a composite supply of vehicle bodies and incidental services with the principal supply being vehicle bodies, to be regarded as supply of goods under Heading 8707 attracting 28% GST and with effect from 22.09.2025, 18% GST.
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